National Health Investors Inc : NHI Reports 7.1% Increase in Fourth Quarter Normalized FFO
02/15/2012| 05:15pm US/Eastern
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National Health Investors, Inc. (NYSE:NHI) announced today its
normalized Funds From Operations ("FFO"), its normalized Funds Available
for Distribution ("FAD") and net income for the three months and year
ended December 31, 2011.
2011 Highlights
Funded and made commitments totaling $100.4 million in leaseback
transactions and mortgage loans involving health care real estate
Closed on a new four-year $200 million bank credit facility,
expandable to $300 million, to fund new health care real estate
investments at an interest rate of LIBOR plus 150 basis points
Increased regular quarterly dividend from $0.615 to $0.65 per
outstanding common share.
Financial Results
Normalized FFO for the three months ended December 31, 2011, was
$21,448,000, or $0.77 per basic and diluted common share, compared with
$20,031,000, or $0.72 per basic and diluted common share, for the same
period in 2010. Normalized FAD for the three months ended December 31,
2011 was $20,908,000, or $0.75 per basic and diluted common share,
compared with $19,468,000, or $0.70 per basic and diluted common share
for the same period in 2010. Normalized FFO and normalized FAD for the
three months ended December 31, 2011 excludes the $275,000 decrease in
the fair value of an interest rate swap agreement and other adjustments
of $135,000.
FFO, as defined by the National Association of Real Estate Investment
Trusts, for the three months ended December 31, 2011, was $21,038,000,
or $0.76 per basic and diluted common share, compared with $19,653,000,
or $0.71 per basic and diluted common share, for the same period in
2010. FAD, a supplemental measure of NHI's cash flow, for the three
months ended December 31, 2011 was $20,498,000, or $0.74 per basic and
diluted common share, compared with $19,090,000, or $0.69 per basic and
diluted common share for the same period in 2010. Net income for the
three months ended December 31, 2011, was $18,114,000, or $0.65 per
basic and diluted common share, compared with net income of $16,955,000,
or $0.61 per basic and diluted common share, for the same period in 2010.
Normalized FFO for the year ended December 31, 2011, was $80,176,000, or
$2.89 and $2.88 per basic and diluted common share, respectively,
compared with $76,483,000, or $2.76 per basic and diluted common share,
for the same period in 2010. Normalized FAD for the year ended December
31, 2011 was $80,419,000, or $2.90 and $2.89 per basic and diluted
common share, respectively, compared to $76,381,000, or $2.76 and $2.75
per basic and diluted common share, respectively, for the same period in
2010. Normalized FFO and normalized FAD for the year ended December 31,
2011 excludes $9,899,000 in gains and recoveries on the sale of a
portion of NHI's investment in marketable securities, a $1,197,000
decrease in the fair value and settlement of an interest rate swap
agreement and other adjustments of $36,000.
FFO for the year ended December 31, 2011, was $88,842,000, or $3.21 and
$3.20 per basic and diluted common share, respectively, compared with
$77,950,000, or $2.82 and $2.81 per basic and diluted common share,
respectively, for the same period in 2010. FAD for the year ended
December 31, 2011 was $89,085,000, or $3.21 per basic and diluted common
share, compared to $77,848,000, or $2.81 per basic and diluted common
share for the same period in 2010. Net income for the year ended
December 31, 2011, was $81,132,000, or $2.93 and $2.92 per basic and
diluted common share, respectively, compared with net income of
$69,421,000, or $2.51 and $2.50 per basic and diluted common share,
respectively, for the same period in 2010.
2012 Guidance
The Company currently forecasts an increase in normalized FFO for 2012
from $3.02 to $3.10 compared with 2011. The Company's guidance range for
the full year 2012 for EPS and Normalized FFO per share, with underlying
assumptions and timing of certain transactions, is set forth and
reconciled below:
Full-Year
2012 Range
Low - High
Net income per diluted share
$
2.58 - $2.63
Plus: Real estate depreciation
0.44 - 0.47
Normalized FFO per diluted share
$
3.02 - $3.10
The Company's guidance range reflects the existence of volatile economic
conditions, but does not assume any material deterioration in tenant
credit quality and/or performance of its portfolio. The guidance is
based on a number of assumptions, many of which are outside the
Company's control and all of which are subject to change. The Company
expects to make new investments in health care real estate during 2012
that meets its underwriting criteria and where the spreads over its cost
of capital generates sufficient returns to its shareholders. These new
investments are expected to be funded by the Company's liquid
investments and by short-term and long-term debt financing. The
Company's guidance may change if actual results vary from these
assumptions.
Investor Conference Call and Webcast
NHI will host a conference call on Thursday, February 16, 2012, at 9
a.m. ET, to discuss fourth quarter results. The number to call for this
interactive teleconference is (212) 231-2933 with the confirmation
number, 21576957. The live broadcast of NHI's quarterly conference call
will be available online at www.nhireit.com.
The online replay will follow shortly after the call and continue for
approximately 90 days.
National Health Investors, Inc. is a healthcare real estate investment
trust that specializes in the financing of healthcare real estate by
purchase and leaseback transactions and by mortgage loans. NHI's
investments involve skilled nursing facilities, assisted living
facilities, independent living facilities, medical office buildings, an
hospitals. The common stock of the company trades on the New York Stock
Exchange with the symbol NHI. Additional information about NHI,
including its most recent press releases, may be obtained on NHI's web
site at www.nhireit.com.
Statements in this press release that are not historical facts are
forward-looking statements. NHI cautions investors that any
forward-looking statements may involve risks and uncertainties and are
not guarantees of future performance. All forward-looking statements
represent NHI's judgment as of the date of this release.Investors
are urged to carefully review and consider the various disclosures made
by NHI in its periodic reports filed with the Securities and Exchange
Commission, including the risk factors and other information disclosed
in NHI's Annual Report on Form 10-K for the most recently ended fiscal
year. Copies of these filings are available at no cost on the SEC's web
site at http://www.sec.gov
or on NHI's web site at http://www.nhireit.com.
Reconciliation of Funds From Operations and Normalized Funds From
Operations (1)(2)(3)
(in thousands, except share and per share amounts)
Three months ended
Year Ended
December 31,
December 31,
2011
2010
2011
2010
Net income
$
18,114
$
16,955
$
81,132
$
69,421
Elimination of certain items in net income:
Real estate depreciation
2,924
2,643
11,019
10,261
Real estate depreciation in discontinued operations
-
55
39
272
Net gain on sale of real estate
-
-
(3,348
)
(2,004
)
Funds from operations
$
21,038
$
19,653
$
88,842
$
77,950
Collection and recognition of past due rent
-
-
-
(1,520
)
Recoveries of previous write-downs
-
-
(99
)
(573
)
Expenses related to abandoned capital offering
-
378
-
378
Gains on sales of marketable securities
-
-
(9,899
)
-
Change in fair value and settlement of interest rate swap agreement(3)
275
-
1,197
-
Other items
135
-
135
248
Normalized funds from operations
$
21,448
$
20,031
$
80,176
$
76,483
BASIC
Weighted average common shares outstanding
27,741,961
27,686,217
27,719,096
27,664,482
FFO per common share
$
.76
$
.71
$
3.21
$
2.82
Normalized FFO per common share
$
.77
$
.72
$
2.89
$
2.76
DILUTED
Weighted average common shares outstanding
27,784,915
27,783,517
27,792,592
27,732,959
FFO per common share
$
.76
$
.71
$
3.20
$
2.81
Normalized FFO per common share
$
.77
$
.72
$
2.88
$
2.76
(1) Management believes that funds from operations (FFO) is an
important supplemental measure of operating performance for a real
estate investment trust. Because the historical cost accounting
convention used for real estate assets requires straight-line
depreciation (except on land), such accounting presentation implies
that the value of real estate assets diminishes predictably over
time. Since real estate values instead have historically risen and
fallen with market conditions, presentations of operating results
for a real estate investment trust that uses historical cost
accounting for depreciation could be less informative, and should be
supplemented with a measure such as FFO. The term FFO was designed
by the real estate investment trust industry to address this issue.
Our measure may not be comparable to similarly titled measures used
by other REITs. Consequently, our funds from operations may not
provide a meaningful measure of our performance as compared to that
of other REITs. Since other REITs may not use our definition of FFO,
caution should be exercised when comparing our Company's FFO to that
of other REITs. FFO does not represent cash generated from operating
activities in accordance with GAAP (funds from operations does not
include changes in operating assets and liabilities) and therefore
should not be considered an alternative to net earnings as an
indication of operating performance, or to net cash flow from
operating activities as determined by GAAP in the United States, as
a measure of liquidity and is not necessarily indicative of cash
available to fund cash needs.
(2) Normalized FFO excludes from FFO certain items which, due to
their infrequent or unpredictable nature, may create some difficulty
in comparing FFO for the current period to similar prior periods,
and may include, but are not limited to, impairment of assets, gains
and losses attributable to the acquisition and disposition of assets
and liabilities, and recoveries of previous write-downs.
(3) The Company has included in its definition of normalized FFO
the change in the fair value and settlement of an interest rate swap
agreement. Accordingly, the normalized FFO per basic and diluted
common share for the three months ended March 31, 2011 was $0.65
rather than $0.70 per basic and diluted common share, as previously
reported.
Reconciliation of Funds Available for Distribution and Normalized
Available for Distribution (1)(2)(3)
(in thousands, except share and per share amounts)
Three months ended
Year Ended
December 31,
December 31,
2011
2010
2011
2010
Net income
$
18,114
$
16,955
$
81,132
$
69,421
Elimination of certain items in net income:
Depreciation in continuing operations
3,225
2,827
11,953
10,919
Depreciation in discontinued operations
-
54
39
284
Net gain on sales of real estate
-
-
(3,348
)
(2,004
)
Straight-line rental income
(1,016
)
(910
)
(3,778
)
(3,140
)
Non-cash stock based compensation
175
164
3,087
2,368
Funds from operations
$
20,498
$
19,090
$
89,085
$
77,848
Collection and recognition of past due rent
-
-
-
(1,520
)
Recoveries of previous write-downs
-
-
(99
)
(573
)
Expenses related to abandoned capital offering
-
378
-
378
Gains and recoveries on sales of marketable securities
-
-
(9,899
)
-
Change in fair value and settlement of interest rate swap agreement(3)
275
-
1,197
-
Other items
135
-
135
248
Normalized funds from operations
$
20,908
$
19,468
$
80,419
$
76,381
BASIC
Weighted average common shares outstanding
27,741,961
27,686,217
27,719,096
27,664,482
FFO per common share
$
.74
$
.69
$
3.21
$
2.81
Normalized FFO per common share
$
.75
$
.70
$
2.90
$
2.76
DILUTED
Weighted average common shares outstanding
27,784,915
27,783,517
27,792,592
27,732,959
FFO per common share
$
.74
$
.69
$
3.21
$
2.81
Normalized FFO per common share
$
.75
$
.70
$
2.89
$
2.75
(1) Management believes that FAD and normalized FAD are important
supplemental measures of a REIT's cash flow for shareholders and
investors. Since other REITs may not use our definition of FAD;
caution should be exercised when comparing our Company's FAD to that
of other REITs. FAD in and of itself does not represent cash
generated from operating activities in accordance with GAAP (FAD
does not include changes in operating assets and liabilities) and
therefore should not be considered an alternative to net earnings as
an indication of operating performance, or to net cash flow from
operating activities as determined by GAAP as a measure of
liquidity, and is not necessarily indicative of cash available to
fund cash needs.
(2) Normalized FAD excludes from FAD certain items which, due to
their infrequent or unpredictable nature, may create some difficulty
in comparing FAD for the current period to similar prior periods,
and may include, but is not limited to, gains on the sale of
marketable securities and changes in the fair value of interest rate
swap agreements.
(3) The 2010 calculation of FAD has been adjusted to include
non-real estate depreciation to conform to the 2011 presentation.
The impact to FAD per basic and diluted common share was $0.01 for
the three months ended December 31, 2010, and $0.02 and $0.03,
respectively, for the year ended December 31, 2010.
Condensed Statements of Income
(in thousands, except share and per share amounts)
Three months ended
Year Ended
December 31,
December 31,
2011
2010
2011
2010
Revenues:
(unaudited)
(unaudited)
Rental income
$
19,791
$
17,934
$
76,050
$
71,289
Mortgage interest income
1,733
1,576
6,652
6,743
21,524
19,510
82,702
78,032
Expenses:
Depreciation
3,225
2,827
11,953
10,919
Legal expense
111
611
559
1,152
Franchise, excise and other taxes
211
43
952
637
General and administrative
1,201
1,299
7,473
7,696
Loan and realty losses (recoveries)
-
-
(99
)
(573
)
4,748
4,780
20,838
19,831
Income before non-operating income
16,776
14,730
61,864
58,201
Non-operating income (investment interest and other)
1,346
1,233
14,744
5,191
Interest expense
(1,219
)
(379
)
(3,848
)
(1,552
)
Income from continuing operations
16,903
15,584
72,760
61,840
Income from discontinued operations
1,211
1,371
5,024
5,577
Net gain on sale of real estate
-
-
3,348
2,004
Income from discontinued operations
1,211
1,371
8,372
7,581
Net income
$
18,114
$
16,955
$
81,132
$
69,421
Weighted average common shares outstanding:
Basic
27,741,961
27,686,217
27,719,096
27,664,482
Diluted
27,784,915
27,783,517
27,792,592
27,732,959
Earnings per share:
Basic:
Income from continuing operations
$
0.61
$
0.56
$
2.63
$
2.24
Discontinued operations
0.04
0.05
0.30
0.27
Net income available to common stockholders
$
0.65
$
0.61
$
2.93
$
2.51
Diluted:
Income from continuing operations
$
0.61
$
0.56
$
2.62
$
2.23
Discontinued operations
0.04
0.05
0.30
0.27
Net income available to common stockholders
$
0.65
$
0.61
$
2.92
$
2.50
Dividend declared per common share
$
0.87
$
0.605
$
2.715
$
2.36
Selected Balance Sheet Data
(in thousands)
December 31, 2011
December 31, 2010
Real estate properties, net
$
394,795
$
327,654
Mortgages receivable, net
78,672
75,465
Investment in preferred stock, at cost
38,132
38,132
Cash and cash equivalents
15,886
2,664
Marketable securities
11,364
22,476
Assets held for sale, net
29,381
36,853
Borrowings under revolving credit facility
97,300
37,765
Stockholders' equity
443,485
442,500
National Health Investors, Inc. Roger R. Hopkins, Chief Accounting
Officer, 615-890-9100
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